A TV Network Should Buy Aereo. Here’s Why.

Andrew Burton—Getty ImagesIn this photo illustration, Aereo.com, a web service that provides television shows online, is shown on an iPhone 4S on April 22, 2014 in New York City.

It would help them compete against Netflix and HBO Go

Aereo, an ambitious startup that aimed to stream live broadcast television to subscribers for a small monthly fee, filed for bankruptcy Friday, months after a devastating loss at the Supreme Court. But it doesn’t have to end this way.

Aereo worked by giving each of its subscribers access to a tiny antenna that picked up broadcast television signals, which were then stored in a cloud server before being beamed over the Internet to users’ laptops or mobile devices, either almost live or well after-the-fact via DVR technology. Subscribers paid about $8 a month for the service, even though broadcasters like NBC and Fox give away their content for free to anyone with an antenna in range of their transmitters, making most of their profits from advertising.

But advertising isn’t the broadcasters’ only revenue stream. Cable companies like Time Warner Cable have for years been legally required to pay broadcasters for the right to retransmit their content to cable subscribers. What sparked the Aereo case is that Aereo didn’t pay those fees, which make up an increasingly large slice of the broadcasters’ revenues. So broadcast networks, including CBS, NBC, ABC and Fox, sued Aereo on copyright grounds. The case ultimately found its way to the Supreme Court, which in June sided against Aereo. Aereo then tried a few legal hail-marys to try saving its business, but as prime Aereo backer Barry Diller admitted over the summer, the game was over once the Court’s gavel was struck.

What I have trouble moving past is that Aereo wasn’t really charging for content, as everything you could watch on the service was free anyway. It was charging for convenience — You could watch Aereo on a laptop or iPhone, and it gave customers access to a cloud-based DVR to store their favorite shows. It also made up for the fact that, here in building-packed New York City at least, the free, over-the-air broadcasts are often difficult to watch with a regular TV aerial. Most of the people I know who used Aereo here did so because they couldn’t get reliable signals from the broadcasters. In this sense, Aereo addressed a technical failure, too. With those factors combined, Aereo was certainly worth eight bucks a month.

The broadcast networks used the courts to pummel Aereo into submission, suing a potential industry disruptor out of existence. But instead of walking away smiling, those broadcasters should realize Aereo only foreshadowed a massive industry shakeup that will change everything about television. As more people cut the cord and switch to on-demand services like Netflix and HBO Go (with the latter soon to be available without a cable subscription), cable television will slowly die out — and take those lucrative retransmission fees with them as it goes. CBS, at least, sees the writing on the door: It’s launching an innovative subscription-based online service, from which it’ll likely make money off ads, too. More broadcasters should realize that cable TV is the past, not the future. And what better, bolder move to make than buying Aereo?

New $50 TiVo Box Targets Cord Cutters and Aereo Refugees

The convenience of TiVo without the high monthly cost of a cable subscription

TiVo’s new Roamio OTA box will be available September 14 for $50. It’s being sold exclusively at Best Buy.

Like other TiVo boxes, this one sports an easy-to-use programming guide, you can set it to automatically record your favorite shows whenever they air and it hooks into online services such as Netflix, Hulu Plus, Pandora, Spotify and YouTube. You’ll also need to pony up $15 per month to access program listings, which are refreshed via a connection from the box to your home network.

The difference here is that the Roamio OTA only works with an over-the-air antenna, pulling in your free local broadcast stations. Aside from the $15-per-month TiVo fee, there’s no need to subscribe to Comcast or FiOS, in other words. You can record up to four shows at once, and the hard drive can store up to 75 hours of high-definition video footage.

Obviously, the sticking point for most people is going to be the monthly charge. But f you’re big on being able to record broadcast shows — complete with all the multi-show recording and commercial-skipping goodness that entails — you’re looking at shelling out less than $200 per year for the privilege of doing so.

Aereo to Court: We’re ‘Bleeding to Death’

A month after the Supreme Court ruled that the TV-streaming service was operating illegally, the cash-strapped startup has requested an emergency ruling that will enable it to start earning revenue again

+ READ ARTICLE

Facing a dire financial situation, the TV-streaming service Aereo Inc. asked a federal court in Manhattan for an emergency ruling on its application to operate as a cable TV service, a move that would allow the company to begin earning revenue for the first time since it stopped operations June 28.

The TV-streaming startup said it is “figuratively bleeding to death,” as it has not made money since it stopped operating after the Supreme Court ruled its services were in violation of copyright law last month.

“Unless it is able to resume operations in the immediate future, the company will likely not survive,” said Aereo in a federal court filing.

A federal judge in Manhattan declined to make a decision on the application Friday, saying the company “jumped the gun” in making the request without permission.

A Supreme Court ruling in June found that the company’s antenna-based transmission of live and recorded broadcast programming was a violation of U.S. copyright law. In response, Aereo began to argue that it was a cable company, the very sort of company it was hoping to replace. But Aereo cannot operate as a cable company without a license to do so from the U.S. Copyright Office, which has said it will not issue a license until the courts determine the company’s status.

Here’s How Aereo Thinks It Can Bring Itself Back From the Dead

Aereo is arguing that it's a cable company in a hail-mary play for legal and business salvation

Is television streaming service Aereo actually “over,” as its top investor, Barry Diller, put it after a seemingly devastating blow at the Supreme Court last month? Maybe not. The company has embraced a new legal argument it hopes can help it stave extinction.

In a letter to a lower court judge Aereo is, for the first time, arguing that it’s a cable company. Neither Aereo nor the broadcasters made that claim before the Supreme Court. Aereo is only bringing it up now because the company’s lawyers have spotted a window, however small, opened by the decision that most regarded as a death knell for the company.

While the Supreme Court never directly said that Aereo is a cable company, it came close to doing so, finding that Aereo “is for all practical purposes a traditional cable system.” Aereo is essentially saying “that’s good enough for us.” But the New York City-based company is making that argument very selectively, taking advantage of two laws’ differing definitions of what exactly a cable company is.

While telecommunications fall under the purview of the Telecommunications Act of 1996, copyright issues are governed by the Copyright Act of 1976. Importantly, both laws have definitions for what constitutes a cable company — but they’re different definitions, and the Copyright Act’s is more broad. Another vital point: the Copyright Act grants cable companies, as it defines them, with so-called “compulsory licenses” to retransmit broadcast television content.

In Aereo’s letter to the lower court judge, it’s only arguing that it’s a cable company in terms of the Copyright Act, and thus “entitled to a compulsory license.” Getting such a license would also neatly address the broadcasters’ initial suit that resulted in the Supreme Court decision. If Aereo receives a compulsory license under the Copyright Act, it would no longer be infringing upon the broadcasters’ copyrights, as the Supreme Court found that it was. “[Aereo is] just trying to get around at least the copyright infringement claim being brought in this lawsuit by saying, ‘Okay, we’re going to apply for a compulsory license,'” says Bruce Boyden, Assistant Professor of Law at Marquette University Law School.

But Aereo’s letter has another key feature: It makes no mention of the Telecommunications Act whatsoever. That means Aereo’s performing a potentially brilliant bit of legal ju-jitsu by trying to take advantage of the two laws’ different definitions of a cable company. It wants to be seen as a cable company to the Copyright Act to get access to the compulsory licenses, but not as one to the Telecommunications Act, which would bring about FCC regulation and require it to pay retransmission fees to broadcasters. When asked if this is indeed Aereo’s new strategy, a spokesperson for the company told TIME simply to “refer to Wednesday’s filing,” which “should answer [the] question.”

Crucially, the Copyright Act’s compulsory licenses would in all likelihood be cheaper than the Telecommunication Act’s fees, meaning that if this all works, Aereo might just survive economically as well as legally.

“It depends on the number of subscribers they have … but I think it’s fair to say [compulsory licenses cost] less than what you’d pay for retransmission consent,” says John Bergmayer, a senior staff attorney at Public Knowledge, an intellectual property advocacy group.

Aereo’s new strategy “could come out any number of ways,” says Bergmayer, who added that any judge involved will have to carefully navigate the murky waters between the Telecommunications Act and the Copyright Act’s differing definitions. But Aereo is facing long odds: While it insists the Supreme Court called it a cable company, the Court’s decision failed to specifically “hold that [Aereo is] a cable system under [the Copyright Act],” Boyden says, meaning a judge might not accept Aereo’s argument.

On top of that, the Second Circuit actually faced a similar case several years ago, eventually deciding that a similar streaming company, ivi, didn’t qualify for the Copyright Act’s licenses—a decision the Supreme Court let stand. Aereo is a slightly different case—ivi streamed to all customers regardless of their geographic location, while Aereo took pains to limit streaming to spots where people could already receive broadcasters’ over-the-air transmissions for free. Aereo actually says the Supreme Court decision against it overturned the lower court’s ivi decision, but, as Boyden argues, “there’s nothing directly in the Aereo Supreme Court decision saying [ivi] is reversed, so I think the district court judge will be bound by ivi to say (to Aereo), ‘no, you don’t qualify.'”

Still, there’s nothing like a company performing a last-minute legal hail-mary pass to try and stay alive. Or, as Boyden put it in a football analogy of a different flavor: “[Aereo] is in stoppage time, they’re one goal down, they need a goal to tie.”

Aereo Lawyers: We’re A Cable Company Now

And therefore, they argue, entitled to a compulsory license under Section 111 of the Copyright Act

In a letter to a District judge on Wednesday, lawyers for Aereo signaled a shift for the television streaming company whose business was halted in late June following a Supreme Court decision.

Aereo’s lawyers are now implying the company — which transmitted television broadcasts directly to users via the Internet — is a cable system and not a technology service provider as the Second Circuit court found. Because of this, the lawyers say they are entitled to a compulsory license under Section 111 of the Copyright Act and should be allowed to continue operating.

“Under the Second Circuit’s precedents, Aereo was a provider of technology and equipment with respect to the near-live transmissions at issue in the preliminary injunction appeal. After the Supreme Court decision, Aereo is a cable company with respect to those transmissions,” the lawyers write in a letter published by the Hollywood Reporter.

They continue, “If Aereo is a ‘cable system’ as that term is defined in the Copyright Act, it is eligible for a statutory license, and its transmissions may not be enjoined (preliminarily or otherwise).”

Following the Supreme Court decision, which found the company violated copyright law and should be required to follow the same rules as cable and satellite companies, the start-up halted business. Lawyers also say that, given the Supreme Court’s 6-3 ruling, any potential legal action against their operations should be limited to the “simultaneous or near-simultaneous streaming of over-the-air television programs.”

Broadcasters argue, however, that Aereo’s arguments are invalid.

“Aereo never before pled (much less litigated) Section 111 as an affirmative defense,” the plaintiff’s lawyers wrote. “Whatever Aereo may say about its rationale for raising it now, it is astonishing for Aereo to contend the Supreme Court’s decision automatically transformed Aereo into a ‘cable system’ under Section 111 given its prior statements to this Court and the Supreme Court.”

How to Roll Your Own Aereo (Spoiler: It’s Not Cheap)

The secret to Aereo’s short-lived success was that you didn’t need to buy hardware to use it. You “rented” an antenna stored at one of Aereo’s facilities somewhere, and the company retransmitted the signal over the Internet to you, either in real time or you could remotely record shows to be transmitted later. The most expensive Aereo plan topped out at $12 a month.

So the spoiler, in case you missed it in the headline: rolling your own Aereo-like setup won’t exactly be cheap. It’s okay. You can click away to something else now. I understand.

If you’re still here, we’ll assume that you want some sort of solution that’ll not only let you record TV, but let you stream live TV to yourself on an array of devices. If you just want to use cord-cutting services — you don’t care about live TV, in other words — check out this post for some services to try. We’re also assuming you get a strong over-the-air signal where you live. You can bet Aereo’s antennae were nicely positioned to catch strong signals; the signals to my place in Boston, for instance, are weaker than a toddler trying to lift a car.

Newer TiVo + Add-on Streaming Box

TiVo wants your business, to be sure, though Zatz figures “cord cutters will need to front about $300 in hardware and $15/month to approximate Aereo.” That’s for a base-model TiVo Roamio box ($200 MSRP) — the only version to sport over-the-air antenna connections — and monthly service. You’ll also need to add TiVo’s streaming box ($130 MSRP), which only streams over a Wi-Fi connection and doesn’t yet sport an Android app.

Older TiVo + Slingbox

If you really want to stream it all, your best bet, according to Zatz, is a used TiVo Premiere box with lifetime service attached to it. That means trying your luck on eBay, basically (they seem to be going for north of $200). That’ll let you use an over-the-air antenna to record shows on the major networks for later. Then, for transmitting live and recorded TV over the Internet to yourself, Zatz says the Slingbox is “still the best game in town.” That means another $180 to $300 in hardware costs, plus paying extra for the Slingplayer mobile apps.

Tablo TV

Zatz also calls Tablo TV “One part Slingbox, one part DVR. Like rolling your own Aereo with a better UI and higher video quality, without those pesky regional restrictions.” The hardware runs between $219 and $289, with lifetime service running another $150 (you can pay $5 a month or $50 a year, too). You also need to supply your own hard drive, which could run a hundred bucks or more if you want to be able to store a lot of video.

Aereo's rent-an-antenna service lost in court. But if the TV business keeps treating customers as adversaries, it will eventually lose too

Yesterday at the Supreme Court, the great American dream of renting a tiny antenna in a closet somewhere so you could more easily watch The Biggest Loser live on your phone died. The court ruled 6-3 that Aereo, a business dedicated to streaming over-air TV signals online to subscribers, was ripping off broadcast networks by taking a free product and selling it like bottled tap water from a public drinking fountain. The Aereo Speedwagon got a flat tire.

I’m not a lawyer. I don’t even like that many legal dramas. So I can only assume that SCOTUS is correct in saying that Aereo’s system was a cheat. Fair enough. And I cover TV closely enough to know that it costs a lot of money to make. Broadcasters saw Aereo taking their signal and selling access to it without giving them a dime; they would be stupid not to try to quash that. Also fair enough.

But if broadcast TV–and the larger TV industry–is a healthy business, it shouldn’t look at the Aereo case as a thumbs-up to continue the status quo. A healthy business would ask: What did customers want from Aereo? And why aren’t we just giving–or selling–that thing to them ourselves?

In simplest terms, Aereo customers wanted a way of getting “free” (scare quotes since they paid Aereo and because nothing is truly free), live broadcast TV without paying hundreds of dollars a year for cable. Yes, they could do this with a digital antenna hooked to a TV, a computer or a DVR, but in practice not everyone can get quality reception. In any case, wanting to get over-air TV without having to pay cable for the privilege is not an outlandish demand; it’s something you’re supposed to be able to do in exchange for broadcasters using public airwaves for free. Aereo users also liked being able to stream that TV to mobile devices–live, not after a day or a week on Hulu–which is not a condition of the networks’ getting public spectrum but should not outrage networks, for whom the more viewers the better.

Did anyone really need that? Maybe not! Maybe Aereo was a stupid product. (I was not a subscriber.) Maybe a devoted consumer could replicate its effects with various workarounds, and maybe a sane consumer could just live without it. So what? Since when is the industry that is bringing you the 16th season of Big Brother not in the business of giving people stupid things they want? Particularly if they’ll pay for it?

One answer is that, while the networks have to technically be in the business of broadcasting for free, in practice they now depend on a system where most people get their signal from cable operators, which collectively pay several billion a year in “retransmission” fees. If Aereo’s methods were legal, cable companies would probably mimic them. And cord-cutting–going without a cable subscription–is a greater threat to cable companies, but the networks also have little incentive to upset this system by making it much easier for penny-pinching couch potatoes to do.

This situation is not all the broadcast networks’ fault by a long shot. There is a complex network of media companies–many owned by the same conglomerates–who are invested in the $200/month big cable bundle: broadcasters, cable channels, premium channels, studios, cable and satellite carriers. Their interests often conflict–as you noticed if CBS disappeared from your cable screen in the middle of the US Open–but for complex, intersecting reasons, they generally owe allegiance to the existing business model of The Big Bundle.

Which means that the larger TV business ends up treating its consumers like adversaries. There are far more options for TV watchers than a decade ago, yet not as many as there could be. You can watch, say, the Olympics on your iPad–but you have to prove you have a cable subscription, even if your cable company doesn’t provide the Internet bandwidth you’re using. You can stream many shows eventually, but you can’t stream much live TV legally for any price. You can choose from a few cable packages, but they all involve subsidizing plenty of channels you’ll never watch. If a certain choice would threaten The Bundle, the answer is: Nope. You don’t really want that. Besides, what else are you going to do?

Well, whatever. Business isn’t a popularity contest, right? And it’s possible to base a successful industry on limiting options and trusting your customers have little other choice–ask the airlines! Of course, Elon Musk’s supersonic tubes are not going to become a practical alternative to air travel any time soon. And maybe TV can manage its own way for a long while yet. But even with the restrictions that the current system sets up, a not-insignificant number of would-be cable subscribers are saying, eh, maybe Netflix isn’t the same, but it’s good enough. I’m not going to argue that TV and cable companies have an ethical obligation here–because LOL–but they may have a long-term interest that they’re sacrificing in the name of squeezing ever more out of The Bundle for now.

But changing our media options isn’t just about demanding things from the bad old corporations. Consumers have an obligation here too: to recognize that TV doesn’t appear in front of your eyeballs like magic. If the current business model gives way to a more a la carte one, that doesn’t mean it will be cheap. A legal Aereo-like service would likely cost more than Aereo charged. Picking and choosing to subscribe to a few channels–without the group subsidy from the Bundle–will probably cost much more than most people assume, and depending what you choose, could cost more than The Bundle.

Media choice, in other words, isn’t magic, but it’s also not something consumers need to be protected from. Every “problem” that technology creates for TV companies–startups like Aereo, people sharing HBO GO logins–is also a sign that people love TV. Why not show those TV lovers a little love too?

The Supreme Court ruled out one type of TV gizmo, but the question of how copyright law works in the cloud-computing age remains unresolved

The U.S. Supreme Court’s decision today in the much-awaited Aereo case leveled a gnarly blow to the growing population of “cord-cutters” and granted an unexpected boon to Washington lobbyists.

The decision limits cord-cutters’ choices in what is an already anemic landscape. As of now, people who want to watch TV without paying for cable or satellite television can subscribe to video streaming sites like Netflix or Hulu for a set price each month. Or they can purchase actual hardware, like Apple TV or Roku, which act like updated, Internet-connected versions of old-school set-top cable boxes.

But when it comes to negotiating copyright fees—the heart of the Aereo case—those much-celebrated “disruptive technologies” aren’t really all that disruptive at all. All of them, from Netflix to Roku, play by the entrenched industry’s rules, dutifully paying what’s known as retransmission consent fees (or “retrans fees”) to broadcasters and other content producers to transmit their shows to paying customers. Netflix, for example, paid AMC for the rights to offer binge-watch favorite “Breaking Bad.”

Aereo was the only company that side-stepped the industry entirely by refusing to pay any retrans fees whatsoever. Aereo argued that it was merely facilitating people’s established right use an antenna to capture “free-to-air” broadcast signals passing through public airwaves. For the last 30 years, the court has interpreted the Copyright Act to protect people’s right to watch broadcast TV captured over an antenna at home. So long as that TV watching experience constituted a “private performance,” within the definition provided by the law, broadcast companies could not demand payment from people, the court held.

But on Wednesday, the court did not buy Aereo’s argument. Its decision not only obliterated Aereo’s business model, it also threw wide-open the door for new questions about certain passages in the Copyright Act. What is the definition of a “private performance” anyway? Why is it a “private performance” if I put an antenna on my roof, capture broadcast signals, and save them onto my DVR player to watch later, and it’s not a “private performance” when that antenna is 20 miles away in Aereo’s antenna farm, and I save those broadcast signals onto the cloud?

And with that—cue the lawyers!

In the ruling today, both the majority and dissenting opinions predicted future scuffles both in Congress and the courts over exactly this question. While the majority ruled that customers streaming broadcast TV through Aereo fell under the category of a “public performance”–not a private one–the three dissenting justices argued that Aereo had not, in fact, “performed at all.”

In both opinions, hundreds of words were dedicated to parsing the meaning of a “performance” and both ended up leaving open the possibility that the court would have to hear more cases on the matter when new technologies continued to emerge. Both suggested that perhaps Congress would need to clarify the meaning of the law.

“We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us,” Justice Steven Breyer wrote for the majority. “Questions involving cloud computing, DVRs, and other novel issues not before the Court…should await a case in which they are squarely presented.”

That sort of deep ambiguity is music to the ears of lawyers and lobbyists. Over the next year or so, Washington should gird itself for hordes of well-paid lawyers to pore over the Copyright Act in an effort to interpret it—and particularly the definition of a “performance”—in such a way that it behooves their clients and, perhaps more to the point, squeezes out whatever competition has emerged in that rapidly developing space.

We should expect cloud computing companies, including Dropbox, Google and Microsoft, to try to ensure that the definition of “performance” does not expand to include every time someone “plays back” a file on one of their services. We should also expect that other industries, particularly those that gain from strong copyright laws, like the Motion Picture Association of America, will try to make that the definition of “performance” as broad as possible in order to create legal concerns for cloud computing companies that allow users to store files without checking for copyright violations.

Whether Aereo will be around to see the other shoe drop remains to be seen. While most analysts agree that Aereo will be lights out by the end of the summer, the company seemed unwilling to throw in the towel. “Our work is not done,” Aereo CEO Chet Kanojia said in a statement following the decision “We will continue to fight for our consumers and fight to create innovative technologies.”

Aereo Backer Barry Diller: ‘It’s Over Now’

Scott Eells—Bloomberg/Getty ImagesBarry Diller, chairman and chief executive officer of IAC, pauses during an interview in New York City on April 1, 2014

The controversial TV-streaming service Aereo’s business methods were ruled illegal by the Supreme Court on Wednesday morning, dashing the startup’s plans to disrupt the well-entrenched pay-TV industry. That’s particularly bad news for media bigwig Barry Diller, who helped the startup get off the ground when his company IAC led a $20.5 million funding for Aereo back in 2012.

Diller is a former chief executive of both Paramount Pictures and Fox who has since leaped into the digital age full-bore. His current company IAC owns hot digital properites such as CollegeHumor, Vimeo and OkCupid. Aereo fit in nicely with his vision of the digital future, and he rewarded the startup with considerable cash. In addition to the original $20.5 million, IAC was also involved in later funding rounds of $38 million and $34 million for Aereo, according to Crunchbase.

Now it’s unclear whether the startup will have any future at all. Diller had previously said there was “no Plan B” if the courts ruled Aereo illegal. On Wednesday, he seemed willing to accept defeat. “We did try,” he told CNBC, “but it’s over now.”

Diller told Bloomberg that though the millions dumped into the company weren’t a significant financial loss for IAC, blocking Aereo’s technology was “a big loss for consumers.”

WATCH: What Aereo’s Supreme Court Case Means For You

The way you watch television could hang in the balance

+ READ ARTICLE

Television streaming startup Aereo could revolutionize the way we watch our favorite programming, but its future is in the hands of the Supreme Court, which is set to decide in the coming days whether Aereo’s streaming methods are legal.

Want to know more about Aereo and what the case will mean for you? Watch TIME’s explainer video above.